Starbucks bails on San Jose after barista wage battle

The political fight at San Jose City Hall over how much money a Starbucks barista should make has become moot after the coffee giant decided to pull out of plans for a new shop at a city-owned facility.

At issue was whether the Starbucks would have to comply with the city’s policy for businesses to pay employees a “living wage” when entering into public contracts. While few would call serving lattes a public service, the question arose because the contract would be with the city at the taxpayer-owned San Jose McEnery Convention center.

If the policy were to be enforced, Starbucks would have to pay the current living wage rate of $15.78 an hour, instead of the standard minimum wage of $10.15. Starbucks had said it couldn’t make its business work based on the higher pay rates for employees.

Some city officials were eager to allow an exemption since the convention center retail space has sat empty for eight years. They note that all 32 city contracts with businesses that do not provide a public service – such as restaurants – were exempted from the higher living wage rate. Typically only companies that are actually providing public services abide by the higher wage standards.

But the city’s powerful labor interests had lobbied hard behind the scenes and at center stage – holding a press conference at City Hall Tuesday and having a person in a giant Grinch costume hand out coal to opposing council members last month. They painted the issue as a rich corporation trying to cheap out on its employees.

“The economy is booming. This is not the time to take a step backward,” Ash Kalra, a labor-backed member of the City Council, said at a press conference Tuesday alongside union members.

So the stage was set for a vote Tuesday – until Starbucks told city officials in the hours leading up to the meeting that it had pulled its interest in building a shop at the convention center.

City officials said they were told by Starbucks that the shop “didn’t fit with their project development cycle” anymore, and didn’t have to do with the wage controversy.

But some pro-business council members said they risked “scaring away” the company, as Councilman Johnny Khamis put it.

His fellow Republican colleague, councilman Pete Constant, said the city had no business telling private companies what to pay its workers.

“We have to come to the realization that minimum wage jobs are minimum wage jobs for a reason,” Constant said. “They’re low or no-skilled jobs.”